Excerpt: - - laxmi devi nigam claimed that out of love and affection she gifted on 21-3-1963 the half portion of her house kiran kunj, gokhale marg, lucknow to her minor sons. ' 9. it is this definition which will apply to the income tax act as well. it will be noticed that a verbal agreement entered into for 'natural love and affection' is not considered as a legal and binding contract under section 2(d) of the contract act. but if any transfer complies with the requirement of such section (1) of section 25 of the contract act it may be regarded as one for a good consideration. section 64(3)(iv) of the income tax act, however, does not require good consideration for transactions contemplated by it. a transaction or an agreement for good consideration will be binding on the parties irrespective.....k. c. agrawal, j. - smt. laxmi nigam, the respondent in this appeal (hereinafter referred to as 'the assessee') is the wife of sri c. m. nigam, i.a.s. they had three minor children in the relevant assessment year 1964-65 of which the relevant previous year is the financial year ending on 31-3-1964. out of these children two were sons whereas the third one was a daughter. they were aditya mohan nigam, aged about 13 years, km. priti nigam and arvind kumar nigam aged about 3 years & 4 months. in the assessment proceedings of the year 1964-65 smt. laxmi devi nigam claimed that out of love and affection she gifted on 21-3-1963 the half portion of her house kiran kunj, gokhale marg, lucknow to her minor sons. sri aditya mohan nigam and sri arvind mohan nigam, and therefore, her income from the.....

Judgment:

K. C. Agrawal, J. - Smt. Laxmi Nigam, the respondent in this appeal (hereinafter referred to as 'the assessee') is the wife of Sri C. M. Nigam, I.A.S. They had three minor children in the relevant assessment year 1964-65 of which the relevant previous year is the financial year ending on 31-3-1964. Out of these children two were sons whereas the third one was a daughter. They were Aditya Mohan Nigam, aged about 13 years, Km. Priti Nigam and Arvind Kumar Nigam aged about 3 years & 4 months. In the assessment proceedings of the year 1964-65 Smt. Laxmi Devi Nigam claimed that out of love and affection she gifted on 21-3-1963 the half portion of her house Kiran Kunj, Gokhale Marg, Lucknow to her minor sons. Sri Aditya Mohan Nigam and Sri Arvind Mohan Nigam, and therefore, her income from the property was only half and that alone was includible in her income. The Income Tax Officer did not accept the case of the assessee and held that income from the property transferred by the assessee in favour of her sons, was liable to be included in her income under section 64 of the Income Tax Act, 1961. On this view, the Income Tax Officer assessed the income of the whole house mentioned above in her hands. The assessee preferred an appeal before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner the assessee pointed out that her husband Sri C. M. Nigam was the owner of a house; known as Kalpana at Lucknow. By a deed of agreement dated 20.3.1963 executed by C. M. Nigam in favour of the assessee, he agreed to make a gift of the aforesaid house in her favour, in lieu whereof she undertook the responsibility upon herself for maintaining and educating the said three children. It was further pleaded that Sri C. M. Nigam was anxious for being assured that after the gift deed of his house was made in favour of the assessee, she would discharge her obligation of maintaining the children faithfully, therefore, by another deed of agreement dated 20-3-1963 the assessee agreed to execute another gift of half share of her house Kiran Kunj in favour of her two minor sons. In pursuance of these agreements the registered gift deeds were executed on 21-3-1963; one by C. M. Nigam in favour of the assessee donating his house Kalpana in her favour the other by the assessee giving half share in Kiran Kunj to her minor sons. The assessee contended before the Appellate Assistant Commissioner that as the Income Tax Department had accepted the transfer made by C. M. Nigam in favour of the assessee, therefore, the transfer of the assessee should also be held to have been made for adequate consideration. The appellate Assistant Commissioner accepted the case of the assessee and holding that inclusion of half of the income from the property in question was not justified in the hands of the assessee, directing the same to be separately assessee as the income derived by the minors for their benefit out of their property.

2. Feeling aggrieved, the department filed a second appeal before the Income-tax Appellate Tribunal, Allahabad. The Income-tax Appellate Tribunal found the two sets of documents, one set executed on 20-3-1963 and the other set executed on 31-3-1963, spelt out director transfer of assets for adequate consideration and not indirect transfer of assets without adequate consideration. As these transactions in the opinion of the Tribunal were direct transfer of assets for adequate consideration the provisions of section 64(iii) and section 64(iv) were not attracted. The Tribunal, accordingly, found that the appeal of the department had no substance hence dismissed the same.

3. In this state of facts at the instance of the department the Tribunal referred the following question to the High Court for its opinion :-

'Whether on the facts and in the circumstances of the case the Tribunal was right in holding that income from half share of the house property names Kiran Kunj could not be included in the income of the Assessee under section 64, of the Income-Tax Act, 1961.'

4. Before attempting to answer the question it may be useful to refer to the provisions of the Income-Tax Act itself. The relevant provisions of section 64(1)(iv) reads as under :-

'Section 64(1)

In computing the total income of any individual there shall be included all such income as arises directly or indirectly.

(i) x x x x x x x x

(ii) x x x x x x x x

(iii) x x x x x x x x

(iv) Subject to the provisions of clause (1) of section 27, to the spouse of such individual from assets transferred directly or indirectly to the spouse by such individual otherwise than for adequate consideration.

(v) x x x x x x x x x x x Explanation ..............

5. Counsel for the Revenue invited our attention to section 16 (3)(a)(iv) of the Income Tax Act, 1922. The aforesaid provision reads as under :-

'16. .......................

(3) In computing the total income of any individual for the purpose of assessment, there shall be included -

(a) so much of the income of a wife or minor child of such individual as arises directly or indirectly -

(i) ......................

(ii) ......................

(iii) ......................

(iv) from assets transferred directly or indirectly to the minor child, not being a married daughter, by such individual otherwise than for adequate consideration; .........................'

(b) ............................

6. The object to the legislature in making the above provision is not to nullify or invalidate the transaction covered by this provision, but to tax the income derived from the properties transferred to the wife or children without payment of adequate consideration. Dealing with the object of this section this Court observed in Maharao Raja Kamlakar Singh vs . Commissioner of Income Tax, : [1968]67ITR351(All) -

'The object of enacting the provisions contained in section 16 of the Act, as has often been said, is to prevent a husband or father from making revocable settlements divesting himself of the income and yet retaining indirect control over the property and the income thereunder or by transferring assets to his wife or minor children, other than for adequate consideration and thus lessening the burden of tax upon himself. This was counteracted by the legislature by enacting section 16 of the Act. Although such transactions may be genuine and valid under the general law, yet, the income therefrom for purpose of tax alone was directed to be assessed in the hands of the husband or father, as the case may be.'

7. The Supreme Court also had an occasion to consider the scope and ambit of section 16(1)(c) and 3(b) in Tulsidas Kilachand and others vs . C.I.T. Bombay City 1 : [1961]42ITR1(SC) . Dealing with the object of the above provisions it quoted with approval a passage from Chamberlain vs. Inland Revenue Commissioners (1943) 25 Tax Cases 317 and observed that the said section was also enacted with the same intent and for the same purpose. The passage relied upon is as follows :-

'This legislation ....................... (is) designed to overtake and circumvent a growing tendency on the part of taxpayers to endeavour to avoid or reduce tax liability by means of settlements. Stated quite generally, the method consisted in the disposal by the taxpayer of part of his property in such a way that the income should no longer be receivable by him, while at the same time he retained certain powers over, or interests in, the property or its income. The Legislatures counter was to declare that the income of which the taxpayer had thus sought to disembarrass himself should, notwithstanding, be treated as still his income and taxed in his hands accordingly.'

8. It is in the back ground of the above that the scope of section 64(1)(iv) of the Income Tax Act, 1961 has to be considered by me. This section creates artificial income and corresponds to section 16(3)(a)(iv) of the Income Tax Act, 1922. The controversy is, however, confined to the interpretation of the words 'adequate consideration.' What then is meaning of these words In Websters Third New International Dictionary the meaning of the word adequate is given as equal to, proportionate to, or fully sufficient, exactly corresponding.' The word consideration is neither defined in this Act nor in the Transfer of Property Act. Section 2(d) of the Contract Act defines 'consideration' as under :

'When, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act of abstinence or promise is called a consideration for the promise.'

9. It is this definition which will apply to the Income Tax Act as well. Section 25 of the Contract Act requires consideration as an essential element for a binding and legal contract. It will be noticed that a verbal agreement entered into for 'natural love and affection' is not considered as a legal and binding contract under section 2(d) of the Contract Act. But if any transfer complies with the requirement of such section (1) of section 25 of the Contract Act it may be regarded as one for a good consideration. Section 64(3)(iv) of the Income Tax Act, however, does not require good consideration for transactions contemplated by it. Its requirement is of adequate consideration. This requirement of adequacy is in terms of money and value. It is only a transfer which takes place for valuable consideration and is equal or nearly equal to the value of assets transferred to the spouse or minor children that alone can be recognised by this section. A transaction or an agreement for good consideration will be binding on the parties irrespective of the fact that consideration which passes under it is inadequate. It is a different thing that in the event of consideration being inadequate a court may take this circumstance into account and find whether the consent of the promisor was freely given or not. But inadequacy of consideration cannot by itself lead to the declaration of contract entered into as void. Illustrations (f) and (g) given in section 25 of the Contract Act bear out the above stand very clearly. These illustrations are :-

(f) A agrees to sell a horse worth Rs. 1,000/- for Rs. 10/-. As consent to the agreement was freely given. The agreement is a contract notwithstanding the adequacy of the consideration.

(g) A agrees to sell a horse worth Rs. 1,000/- for Rs. 10/-. A denies that his consent to the agreement was freely given. The inadequacy of the consideration is a fact which the court should take into account in considering whether or not As consent was freely given.

10. Dealing with the question of adequacy of consideration Cheshire and Fifoots in their book Law of Contract Eighth Edition at pages 69 and 70 have stated the law as under :-

'It has been settled for well over three hundred years that the courts will not inquire into the adequacy of consideration.' By this is meant that they will not seek to measure the comparative value of the defendants promise and of the act or promise given by the plaintiff in exchange for it, nor will they denounce an agreement merely because it seems to be unfair. The promise must, indeed, have been procured by the offer of some return capable of expression in terms of of value.'

11. The above discussion will show that when the legislature used the words 'adequate consideration' it did not intend to accept a transaction for good consideration or legal consideration or inadequate consideration for the purpose of section 64(1)(iv) of the Income Tax Act. The intention obviously is to treat the income earned from the properties of the assessee as his own irrespective of the transfers. The insistence of the legislature to recognise, for the purpose of the Income Tax, only transactions made for adequate consideration shows that it was not prepared to ignore transfers made for good consideration or legal consideration for the purpose of computation of income of the transferrer. Any transfer of a property not made for valuable consideration will not be covered by section 64(1)(iv) of the Act. In order that the income obtained from the properties transferred is assessed in the hands of the transferee it is necessary that the transfer must have been made for adequate consideration that is, consideration which is equal or nearly equal to the value of the properties transferred. The requirement of adequacy of consideration under the Income Tax Act whereas for a valid contract under the Contract Act, adequacy is not needed, clinches the controversy. It establishes that the legislature has insisted on transfer for valuable consideration with the object that the liability of income tax is not evaded. The submission made by the learned counsel for the assessee that the transaction effected to meet the legal obligation was also for 'adequate consideration' would be against the language of section 64. In order to accept the contention of the counsel for the assessee the words of section 64(1)(iv) will have to be strained and artificial meaning will have to be given to include a case of transfer made in discharge of legal obligation. The object of the section being to defeat the attempts made by the husband or father to escape from the tax liability, by merely making transactions in favour of his wife or children, the same cannot be achieved if the submission of the learned counsel for the assessee was to be accepted in this regard. Had it been the intention of the legislature, it would have clearly provided for the same. Any transfer made in fulfilment of legal obligation may be categorised as one for good consideration. But, as observed above, adequacy of consideration means something different than good consideration. The words 'adequate consideration' denote consideration other than mere love and affection. In Webesters Third International Dictionary the words 'valuable consideration' has been stated to mean an equipment or compensation having value that is given for something (as money, marriage services) acquired or promised and that may consist either in some right interest, profit or benefit accruing to one party or some responsibility, forbearance, detriment, or loss exercised by or falling upon the other party. According to this dictionary the word 'adequate' means equal in size or scope equal to or proportional to or fully sufficient for a specified or implied requirement. Taking into account these meanings it seems to me that a transfer for less than an adequate or full consideration in money or moneys worth falls within the mischief of this section.

12. In Tulsidas Kilachand vs. Commissioner of Income Tax (I.T.R. 42 p. 1), Tulsidas Kilachand made a declaration of trust in favour of wife and directed that income received from certain shares be paid to his wife for a period of seven years. In the assessment year 1952-53 a sum of Rs. 30,404 was received as dividend income on those shares. He claimed that this income could not be considered as to belonging to him, hence was not assessable in his hands. The Income Tax Officer did not accept his case. On appeal, the Appellate Assistant Commissioner held that the case was covered by section 16(3)(b). The matter was taken to the High Court in a reference. The High Court held that section 16(3)(b) was applicable to the facts of the case and answered the question against the assessee of that case. He, thereafter filed an appeal in the Supreme Court. This appeal was also dismissed. Dealing with the question of adequate consideration it observed :-

'It remains to consider whether there was adequate consideration for the transfer. Reliance has been placed only upon love and affection. The words 'adequate consideration other than mere love and affection, which, in the case of a wife, may be presumed. When the law insists that there should be 'adequate consideration', and not 'good consideration' it excludes mere love and affection. They may be good consideration to support a contract; but adequate consideration to avoid tax is quite a different thing. To insist on the other meaning is really to say that consideration must only be looked for, when love and affection cease to exist.'

13. This Supreme Court decision in my view sets at rest the controversy in favour of the Revenue. I may now refer to other decisions where the same view has been expressed. The first case is reported in : [1942]10ITR308(All) Gaya Prasad Tewari vs. C.I.T. The High Court found that the allowance of Rs. 600 was income which arose to the assessees wife 'from assets transferred directly or indirectly to the wife by the husband other than for adequate consideration or in connection with an agreement to live apart 'and was therefore computable as part of the total income of the assessee under section 16(3)(iii) of the old Act. The basis of this decision is the same that the transfer of assets was not for adequate consideration. The second case is a Full Bench decision reported in H. P. Banerji vs. C.I.T. 1941 I.T.R. 137. In this case the Full Bench of the Patna H. C. held that a transfer on account of natural love and affection was not a transfer for consideration at all and falls within 16(3)(a)(iii) and that transfer should not only be for good consideration but for adequate consideration. Harries C.J. observed in this case :-

'Even assuming therefore that natural love and affection might amount to good consideration, which, in my view, it does not, that would not be sufficient. The wifes income will only be assessed in her hands if it arises from assets transferred for adequate consideration, that is consideration which is sufficient or reasonable having regard to the value of what is transferred. It must be equal or nearly equal in magnitude or extent to what has been transferred. If natural love and affection is held to be adequate consideration, then the sub-section becomes, to all intents and purposes, a dead letter. In fact, it could never apply to income from assets which were the subject matter of any gift by a loving husband to his wife and could only apply to rare cases where a husband actually sells or transfers property to his wife for some material return which is value or extent was far less than the value of the property transferred. To hold that this sub-section has no application to out and out gifts out to transactions, sub-section a meaning which could never have been intended by the Legislature. In my judgment, transfers by a husband to his wife of assets otherwise than for adequate consideration, cover all transfers in the nature of gifts or transfers made adequate consideration, cover all transfers in the nature of gifts or transfers made purely on the ground of natural love and affection. That being so, the income-tax authorities were right in holding a that s. 16(3) applied to this case.'

14. Faz Ali, J. agreed with Harries C.J. whereas Manoharlal, J. wrote a different but a concurring judgment. I am in respectful agreement with the view expressed in this case.

15. This Patna case was followed by Lahore High Court in the case of Sardari Narain Kaur and others (1948) 11 I.T.R. 448).

16. In Commissioner of Income-tax, Kerala vs . P. P. Hasan : [1967]63ITR791(Ker) , the Kerala High Court found that a waqf created by an assessee, who was a Mohammadan, for the benefit of his wife and children fell within section 16(3)(b) of the Income Tax Act inasmuch as a waqf involves a transfer without consideration of the property dedicated by the assessee to a juridical person, viz. the Almighty and the transfer was for the benefit of the wife and the children. In this view, the income earned from the properties transferred to the waqf was assessed in the hands of the waqf.

17. All these decisions have laid down that the requirement of 'adequate consideration, would be satisfied only when the transfer is for valuable consideration equal to the value of the property transferred. It is true that most of the cases have interpreted section 16(3)(b) of the old Income Tax Act, 1922 in relation to transfers made in favour of the wives, but the ratio of these cases fully apply to the instant case as well.

18. Counsel for the assessee relied upon an authority reported in Volume : [1963]50ITR503(Ker) in support of his proposition. In this case a settlement of properties made by a father in favour of his minor children to fulfil his legal duty to maintain and educate the children according to their status in life was held as a transfer not made 'otherwise than for adequate consideration', within the meaning of section 16(3)(a)(iv) of the Indian Income Tax Act, 1922. This authority, no doubt, supports the proposition profounded by him. This case was however decided on the concession made by the Revenue that settlement created to maintain and educate minor children was for consideration. This, therefore, does not have persuasive value. Further, the Kerala High Court itself in Volume : [1967]63ITR791(Ker) did not follow the above case as it held in the subsequent case that waqf created by an assessee for the benefit of his wife and children fell within section 16(3)(b) of the Income Tax Act. I am, therefore unable to agree with the view taken in 1963 I.T.R. 503.

19. I may now refer to another decision of the Supreme Court which has some bearing on the controversy in question.

20. In C. R. Nagappa vs . C.I.T., Mysore : [1969]73ITR626(SC) Nagappa executed on 14-4-1955 seven separate deeds of trusts settling specific properties for the benefit of his minor children. He vested the properties in four trustees. Under each deed of trust a portion of the income arising out of the trust properties were to be utilised for the benefit of the beneficiary and the balance was to be accumulated for his benefit in future. In the assessment year 1962-63, the Income Tax Officer included the income received from the trust properties and used for the benefit of the minors in the hands of Nagappa but not the income which was directed to be accumulated for future. The Commissioner of Income Tax under section 263 of the new Act directed that the income accumulated should also be included in the assessment of Nagappa. He filed an appeal before the Appellate Tribunal and contended that this income was liable to be assessed in the hands of the trustees. He failed every where and finally brought the matter before the Supreme Court. After quoting section 64 of the Income Tax Act, 1961 the Supreme Court found :-

'It is clear that in each of the five cases income which in truth is not the income of the assessee is directed in the special conditions prescribed to be included in the total income of the assessee. Where an individual has transferred assets without adequate consideration to another person or association of persons, the income from the assets intended for the benefit immediate or deferred of the spouse or minor child of such individual is, by clause (v), liable to be included in the income of the individual. There is no doubt that the word 'transferred' includes settled under a trust.'

21. It is true that the Supreme Court was mainly dealing with section 64(v) of the Act, but inclusion of income in the hands of the settlor despite the settlement of the property in favour of the minor children is possible only when it is held that the settlement was without adequate consideration. The Supreme Court ignored the transfers made in favour of the children and found the income from these properties liable to be assessed in the hands of the settlor.

22. For the reasons given above, I find myself unable to subscribe to the view propounded by the counsel for the assessee.

23. Counsel also referred to the provisions of section 20 of the Hindu Marriage Adoption and Maintenance Act and urged that as this section casts a legal duty on the guardian to maintain and a right in the minor to enforce that right, therefore, any transfer made to effectuate the purpose of this section must be held to have been made for adequate consideration. I have already given reasons for not accepting such a contention, and for those reasons fail to find any tenability in this submission as well. It may be emphasised that the term 'adequate consideration' must carry the meaning assigned to it. If the requirement is payment of consideration equal or nearly equal in value to the property transferred, it will remain the same in all conditions and for all purposes. Acceptance of this interpretation further is likely to make nugatory this provision as liability to maintain minor children is bound to arise in each case whenever such a transfer is made. It will be possible for the assessee transferor to plead in every case that the transfer was made in discharge of the legal obligation. The result would be that the very object and purpose for which this provision was enacted will be defeated. Taking this aspect of the matter and dealing with a case of transfer made for natural love and affection the Bombay High Court very correctly observed in 1958 I.T.R. page 383 at page 389.

'One must presume that in all normal cases the existence of the relationship of husband and wife or parent and child imports natural love and affection; and were we to accept the argument of Mr. Kolah, this particular sub-clause would have to be rendered nugatory because natural love and affection would ordinarily exist in such a relationship and the sub-clause can, if at all apply to a rare case where natural love and affection has ceased to exist between the husband and the wife or the parent and the child; but then, even such a case appears to be remote because it is unlikely that in such a contingency the individual concerned would part with assets in order to secure any income to the wife or the minor child.'

24. The same would be the position in a transfer like the present if this contention were to be accepted.

25. For the reasons mentioned above, the question is answered by me in favour of the department. I, accordingly, hold that the income from one-half share of the house property named Kiran Kunj was includible in the income of the assessee under section 64(i)(iv) of the Income Tax Act, 1961. The department will be entitled to receive the costs of this reference which I assess at Rs. 200/-. Counsels fee is also assessed at the same figure.

C. S. P. Singh, J. - I have the advantage of reading the judgment of brother K. C. Agrawal, J. With respect, I am unable to agree with his opinion.

27. The question that arises for consideration in the reference is as to whether the gift made on 20-3-63 by the assessee of half share of her house Kiran Kunj in favour of her two minor sons was for adequate consideration. Two questions thus require consideration :-

1. Whether there was any consideration for the gift ?

2. Whether it was adequate ?

Now, no consideration passed from the minor to the assessee. In fact there could be none for the transaction was one of gift. But it is well settled that the mere fact that the consideration did not flow from the person concerned is of no consequence for the consideration may in law proceed from third parties. (See Raja Shiv Prasad Singh vs. Tincouri Benerji AIR 1963 Pat 477; Daw Po and other vs. U. Po Hmy in and another AIR 1940 Ran 91; Mt. Wahidan vs . Nasir Khan and another : AIR1930All434 ; B. N. Chetti vs. N. I. N. Varu by R. B. Chetti AIR 1923 Mad. 434. We have as such to find out what was the consideration for the transaction and secondly whether it was adequate.

28. Before entering into the legal aspect of the matter, it will be useful to set out some relevant facts. C. M. Nigam the assessees husband had three children, two sons and a daughter. On 20-3-1976 two agreements were entered into between the parties viz. C. M. Nigam and the assessee. C. M. Nigam agreed to transfer his house known as 'Kalpana' in favour of the assessee, provided she undertook the responsibility upon herself for maintaining and educating the three children. C. M. Nigam was anxious that the assessee should carry out the obligations which she had undertaken and in order to endure that this was done, the assessee entered into an agreement on the same date, undertaking to gift half share of the house Kiran Kunj in favour of two minors. Subsequently, on 21-3-63, C. M. Nigam executed a gift deed of the house Kalpana in favour of the assessee, and the assessee in turn executed a gift of half share of the house Kiran Kunj in favour of the two minor sons. It is the income from the half share of the house Kiran Kunj which is in dispute in the present controversy. The transfer made by C. M. Nigam in favour of the assessee made for maintaining the three children, has been held by the Department to be for adequate consideration, and the income from Kalpana i.e., the house of C. M. Nigam, has been excluded from the income of C. M. Nigam for subsequent assessment years. Thus in this reference, we have to proceed on the assumption that the transfer made of house Kalpana in favour of the assessee was for maintenance of the minor children of C. M. Nigam, and was for adequate consideration.

29. It is clear that had got the assessee agreed to undertake the maintenance of the children, the house Kalpana would not have been gifted to her. The consideration for the gift of Kalpana, so far as C. M. Nigam is concerned was the maintenance of his minor children, which as has been seen, has been held to be adequate. The primary consideration for the gift of Kiran Kunj as far as the assessee is concerned was the gift of the house Kalpana for she would not have gifted her house had not the house Kalpana been gifted to her. Apart from this consideration there was also the consideration that she was discharging her undertaking to gift the house to her children to assure her husband that she will maintain the children. We have thus a case where an assessee has gifted immovable property to her children in order to secure a gift of immovable property in her favour. There is no finding that the value of the house Kalpana which the assessee received by way of gift was in any way less in money value than half of the house Kiran Kunj. This being so, the consideration for the gift, qua the assessee was adequate. There cannot also be any shadow of doubt that the gift of the house Kalpana and the discharge of the obligation under the agreement would constitute consideration even on a restricted view of the phrase. The decision of the Supreme Court in Tulsidas Kilachand and others vs . C.I.T., Bombay, : [1961]42ITR1(SC) does not in any way affect the position, as all what was laid down was that mere love and affection would not constitute adequate consideration for the purposes of section 16(1)(c) of the Income tax Act, 1961. In the present case, the consideration for the gift was the gift of the house Kalpana in favour of the assessee and the fulfilment of the promise by the assessee to her husband that she would execute a gift deed in favour of the two minor sons in favour to assure her hand that she would discharge her obligation under the agreement to maintain the children. Similar is the position with the cases of Pandit Gaya Prasad Tewari vs . Commissioner of Income tax : [1942]10ITR308(All) ; Rai Bahadur H. P. Bannerjee vs . C.I.T., Bihar and Orissa : [1941]9ITR137(Patna) and in re : Sardari Narain Kaur and others . The decision in C.I.T., Kerala vs. P. P. Hassan (1957) 63 ITR 791 does not have any great relevance to the present controversy, for in that case a waqf was created by the assessee for the benefit of his wife and children. The creation of a waqf will not stand on the same footing as the transfer made in the present circumstances. The decision of the Supreme Court in C. R. Nagappa vs . C.I.T., Mysore : [1969]73ITR626(SC) can be distinguished on the same footing. The Bombay High Court decision in Tulsidas Kilachand vs. C.I.T., Bombay City can also be distinguished on the ground that the consideration for the gift in the present case by the assessee, is not solely the maintenance of her children but also the transfer of the house 'Kalpana' in her favour.

30. I would, accordingly, answer the question referred in the affirmative, in favour of the assessee and against the Department.

By the Court

As there is difference of opinion between us on the question referred, we direct that the papers of this Case be laid before the Chief Justice for the question being referred to one or more of the other Judges of this Court. The case shall be listed before us after the decision of the other Bench is given.